Daily Market Update

Dollar Extends Gains on Risk-Off Trading

August 15, 2018

The U.S. dollar was on the offensive again overnight, with the Bloomberg Dollar Index gaining 0.2% and touching its highest level in since June of 2017.

Overview

The dollar strength comes even as the Turkish lira recouped 7% of its recent losses after bank regulators acted to deter short-selling of the currency. Nevertheless, the Turkish lira is 20% weaker this month.

The greenback has found support as a safe-haven as global equites are awash in red.

There is a slew of economic data set for today but so far has been unable to give the greenback extra juice. U.S. retail sales rose more than forecast in July, boosted by Amazon’s Prime Day. Overall sales advanced 0.5% from June, beating expectations of a 0.1% rise. However, June’s print was downwardly revised, cutting into the overall gains. Sales excluding autos and gasoline rose 0.6%, also beating expectations. Industrial production will cross the wires at 9:15 Eastern.

 

EUR/USD

EUR/USD traded lower again overnight and touched a 14-month low. The Turkish crisis is far from over and European bank’s exposure will keep the Euro under pressure for the foreseeable future. The economic docket in Europe has been light so traders have nothing else to focus on except for Turkish troubles and Italian politics. Even when economic data impresses (yesterday’s GDP), it has been unable to lift the common currency.

 

GBP

The British pound continued to fall against the U.S. dollar despite data that showed inflation is accelerating which may force the central bank to raise rates again sometime next year. U.K. consumer prices rose 2.5%, above the central bank’s 2.0% target, the highest reading in eight months. Brexit uncertainty will continue to dominate trade but we will keep an eye on inflation trends in the U.K.

 

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